A fully amortizing loan is one of the most difficult terms for people to understand, so I will make it simpler for you to understand it.
A fully amortizing loan is one which has no interest rate for the first 5 years, after that it will start charging interest and you can pay off the loan in any given time.
The process of amortization:
If you have a fully amortizing loan then you don’t need to worry about your monthly payments as the loan company will charge you interest only for the first 5 years. So, you will have to pay only for the principal amount for these 5 years. After that you will not have to pay any interest. So, if you pay off your loan in 10 years, then you will get your principal back plus interest that you have paid.
What is the benefit of a fully amortizing loan?
There are many benefits of a fully amortizing loan but I am going to share the top 3 benefits with you here.
1. You can repay your loan in a shorter time
With a fully amortizing loan, you will have to pay only for the principal amount, so you can easily repay your loan in a short time. You don’t need to pay any extra money for the interest, so you can save a lot of money.
2. You don’t need to worry about your monthly payments
If you have a fully amortizing loan then you don’t need to worry about your monthly payments. You will not be charged interest for the first 5 years, so you can easily repay your loan in a short time.
3. You can get a lower interest rate
This is one of the best benefits of a fully amortizing loan as you will be able to get a lower interest rate.
Conclusion: A fully amortizing loan is the most beneficial loan which you can take if you are planning to repay the loan in a shorter time. So, I hope you liked this post about “What is a fully amortizing loan”. If you have any queries related to this post then feel free to comment below